The latest on Everton’s search for new owners after the collapse of the The Friedkin Group’s takeover
Everton’s search for stability at the top of the club took a blow with The Friedkin Group’s decision to pull out of its takeover attempt this week. The move punctured the positive atmosphere that had built during the summer and marks a return to uncertainty over the future of the ownership of the club.
Yet while the break down in talks – the fourth deal for a significant stake in the club that has collapsed after reaching a period of exclusivity in two years – has caused frustration, the message from inside the club is that the summer can still be one in which progress is made. As the dust settles and parties consider resurrecting the bids that failed last month, the ECHO takes a look at the state of play.
What happened this week?
On Friday morning Everton released a statement provided on behalf of The Friedkin Group and Blue Heaven Holdings, the vehicle through which Farhad Moshiri owns the club. The announcement, released at 11am, confirmed talks between the parties had been formally concluded and would not progress to a deal. The news plunged the club into uncertainty as the search for new ownership was dealt a major setback. While The Friedkin Group had stressed the exclusivity period did not make a deal with Moshiri inevitable, the prospect of the club being taken over by a company with a positive track record in football and access to billions of pounds had created hope of a brighter future after 18 troubling months off the pitch.
The statement said: “Following a period of exclusivity, discussions between Blue Heaven Holdings and The Friedkin Group over a potential sale of a majority stake in Everton have ended and The Friedkin Group will not be progressing with a purchase of the club. Both Blue Heaven Holdings and The Friedkin Group entered discussions in good faith to explore whether a sale could be agreed. Those discussions have concluded. The parties agree it is in both their interests for Everton to explore alternative options. The Friedkin Group will remain a lender to the club and is proud to have played a key role in enabling the new stadium to be built, which will help ensure a bright future for both Everton and the city of Liverpool. Blue Heaven Holdings maintains a positive relationship with The Friedkin Group and would like to thank them for the time and effort they have put into this process.”
We use your sign-up to provide content in ways you’ve consented to and improve our understanding of you. This may include adverts from us and third parties based on our knowledge of you. More info
Why did the talks break down?
The Friedkin Group had emerged from a packed field to sign the exclusivity agreement with Moshiri last month, that deal paving the way for the US organisation to conduct additional due diligence into the club and its finances. It is that work that led to the emergence of the issues that proved fatal to the discussions. On an encouraging note, if there is one, it is understood the problem was not anything discovered within the state of the club itself. Instead the trouble surrounded the club’s debt – specifically its loan from 777 Partners. The Miami-based group was primed to complete its own takeover of Everton after signing a deal for the club with Moshiri last September. Hopes the group would win regulatory approval from the Premier League by Christmas proved misguided and by spring the arrangement began to unravel as 777 Partners was buffeted by legal action and the breakdown of its portfolio of interests. Against that backdrop, talks with Everton concluded at the end of May as it failed to meet the terms of its share purchase agreement. While the takeover fell through, 777 Partners retained a foothold in the club through the near-£200m in loans it had provided to Everton. It is that debt that proved insurmountable to The Friedkin Group. The issue was not the size of the borrowing but the prospect of having to work through the problems faced by 777 Partners to resolve it. Ultimately, there were too many questions that it found too difficult to answer for The Friedkin Group to feel comfortable taking on the club.
What does this mean for Everton?
The news means that Moshiri and Everton are back to square one. The majority shareholder has been seeking a route out of Everton for more than two years and this was the fourth exclusivity deal to break down in that period. The hunt for a new buyer is back on and because of that, a summer in which supporters had begun to allow themselves to focus simply on football will now see fans hanging on to developments off the pitch.
The setback also means uncertainty over the long term state of the club. In the short term, Blues insiders have expressed confidence in the club’s position. The Friedkin Group had supplied £200m, which was used to pay off the lending of another one-time prospective investor, MSP Sports Capital, and provide around £40m of working capital towards the club and the stadium development. It has been made clear that it will not be seeking that money imminently. The summer is also a period when the club’s finances are often healthiest, with the first tranche of TV money arriving and the ability to raise funds through the transfer window. But the spectre of instability now looms large on the horizon. Everton relied on the money supplied by 777 Partners to get through to the end of last season. It is unclear to what extent Moshiri can, or wants to, pump more money into a club that he has already poured hundreds of millions of pounds into. So the longer the takeover situation continues without resolution, the more serious the issue will become.
Who took a look last time and could they come back?
There were rivals to The Friedkin Group last month. John Textor, who has a stake in Crystal Palace, was vocal in his belief Everton represented a good opportunity and spoke with Moshiri. Any move would be prevented while he attempts to sell his 45% holding at Selhurst Park. Local businessmen and Everton supporters Andy Bell and George Downing led a bid that was backed by the investment bank that manages the wealth of IT billionaire Michael Dell. Separate consortiums said to have had the backing of billionaires were fronted by businessman Vatche Manoukian and the umbrella group Vici Private Finance were also involved, as was another group led by Kevin Malone, who has a background in baseball.
Whether they will return to the table remains to be seen but the extent of the interest when the 777 Partners deal fell through was a source of optimism in and around the club. Questions remain, however, over how they will view the reasons behind The Friedkin Group’s withdrawal from proceedings – the biggest being that if an outfit of that size, health and expertise felt unable to solve the issues raised by the 777 Partners loans, could anyone else?
How was the news met inside the club?
News of the takeover collapse was met with disappointment inside the club. There had been the prospect of an end to one of the biggest sources of instability of recent years and the loss of that hurt departments that had worked hard to try and help the club progress on and off the pitch. The Friedkin Group informed Moshiri of its intentions on Thursday and the news filtered through the club in the hours that followed. There are many hardworking people who care deeply about Everton within the club and this news will have hurt on a personal and professional level. For Sean Dyche, it means the prospect of dealing with questions about events off the pitch rather than on them when the season resumes – something he has already had to do too much of during his 20 months on Merseyside.
What does it mean for the transfer window?
There is unlikely to be any immediate change in the club’s transfer activity this summer as a result of this news. Director of football Kevin Thelwell made clear before the end of last season that this would be another period of ducking and weaving in the market, with savvy work needed to strengthen the squad while bringing in sales that would help towards the club’s attempts to comply with spending regulations.
Even when the takeover by The Friedkin Group was in the pipeline, this was not a window being played out with the expectation of new-found riches on the horizon. Work has focused on improving the club’s regulatory position and strengthening in a sustainable fashion. The business already done and the expected departure of Amadou Onana to Aston Villa in a deal worth £50m has provided a good foundation to the window. Should there be no progress on the takeover front by the end of the summer then more business could potentially be considered as the club looks ahead to the bills that will need paying in the months between windows. But Everton could not have issued a firmer statement of reassurance on that front than the message sent to Manchester United this weekend that the takeover setback would not lead to any drop in the club’s valuation of Jarrad Branthwaite – which is well in excess of anything the club has offered so far.